This renewal application is based on a conceptual and technological breakthrough made during the current project period - identification and isolation of pre-neoplastic cells that serve as precursors for hepatocellular carcinoma (HCC) in mice. HCC is one of the most aggressive and difficult to treat cancers, with a current 5 year survival rate of 8%, yet HCC develops over the course of 20-40 years in the context of chronic liver inflammation (hepatitis) and damage. HCC development is preceded by appearance of foci of altered hepatocytes (FAH), which have been suspected (but never proven) to represent pre-neoplastic lesions. We succeeded in isolating HCC progenitor cells (HPC) from two different mouse HCC models and obtained evidence suggesting that HPC reside within FAH in mice treated with a chemical carcinogen that targets hepatocytes. Curiously, HPC appear to be related, based on their gene expression profile, to oval cells, a bipotential progenitor cell involved in repair of certain liver injuries in mice and men. However, it is not clear whether HPC arise from oval cells or from differentiated hepatocytes which are the target for the carcinogen. Understanding the mechanisms that control formation of HPC and their progression to full blown HCC will enable the development of preventive and therapeutic strategies for HCC eradication at an early stage, before this malignancy becomes refractory to all known therapies. In addition to cell intrinsic factors, progression of HPC to HCC is subject to micro environmental control. Correspondingly, we will investigate the mechanisms responsible for initiation and maintenance of activated STAT3, a critical oncogenic transcription factor, in HPC. These studies will explain how STAT3 activation is maintained within HPC and HCCs, but not in the adjacent normal liver, even though the normal tissue is exposed to STAT3-activating cytokines. We will investigate the contribution of these mechanisms to HPC to HCC progression by their genetic manipulation within isolated HPC. We will also study the role of the cell surface protein and stem cell marker CD44 in HPC formation and HPC to HCC progression, as our preliminary results indicate that HPC express CD44 and that CD44 is essential for FAH formation and HCC development. We will study the mechanisms responsible for CD44 upregulation in HPC and for production of the alternatively spliced CD44v6 isoform that interacts with c-Met and potentiates its signaling activity. Another marker expressed by HPC is the transcription factor Sox9, which is also expressed in oval cells. We will investigate the mechanisms responsible for Sox9 expression in HPC, focusing on the role of the Notch pathway and will exploit Sox9 in lineage tracing experiments that will determine the origin of HPC.